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Innovation management (2) - 'What is innovation?' - Emagazin

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How to innovate?

In the previous article we were talking about innovation and have concluded that it could be stimulated, or managed. Now, we will try to answer more specifically what is innovation, or what it is not.

Before we get into the methodology, we would first need to see what is the definition of innovation?

Profiting in some way (environmentally, economically or socially) from the latent potential of ideas which are new to your organization. (CENTRIM, UK – centrim.mis.brighton.ac.uk/)

Profiting

What are the key words (crucial, important words), of this definition. The most important one is the word ‘profiting’. It tells us that innovation, to be an innovation, and not just a good idea, needs to be profitable. It doesn’t only mean that innovation has to make money. Government organizations do not make money, but they can also innovate. For them, innovation is profitable if they improve their services, and find better ways to spend taxpayers money. In general, innovation, or new ideas, when implemented, must bring positive results, in our environment, the economy, or in our society.

Latent potential of ideas

Than we have the words ‘latent potential of ideas’. Every organization has some capacity to innovate. Most often it is just a potential, since not all of the new ideas ever come out in the open. The essence of innovation management is to uncover this hidden potential of every organization, good, profitable ideas. It doesn’t necessarily mean to bring new ideas from the outside, but to stimulate people inside the organization to innovate, to start thinking ‘out of the box’. To create a situation where lots of small sparks would light up and release that latent potential of ideas. Most often people are afraid to innovate because they assume it is not part of their job description. For any organization, in order to become innovative, each and every employee must contribute, and become that little spark of innovation.

New to your organization

The words ‘new to your organization’, give us a clue on what kind of ideas we can bring in. Of course, these ideas must be new, but the words ‘to your organization’, tell us that these new ideas do not have to be revolutionary, they just need to be new to your organization. Also, there are so many good ideas that other organizations had successfully exploited (and profited by them). If they have used them successfully, so can your organization. It is all about exploiting ideas, not just possessing them. In most of the business schools, most of the educational curricula is about other people great ideas, successfully put to practice. These successful ideas are called ‘business case studies’.

Vidikovac open market

So, lets take the practical ‘case study’. Vidikovac is one of the municipalities in Belgrade, and we will look into their open market. This market is ran and operated by the ‘City Markets’ public enterprise (read: city bureaucracy), and you may guess how pretty this case study is going to turn out. Also, you may wonder why we took this case study. For most of the people in Serbia open markets are not considered to be business enterprises. They are considered to be a public enterprises, and as such, they don’t need to be innovative (read: competitive). But is that so?

If you are an innovation consultant, the first step you would take is to make an industry and competitive analyses. Right now, I wouldn’t go into proper methodology, so lets just use common sense. What are the general trends in western European countries regarding open air farmers markets? Unfortunately they are dieing out. People are becoming too busy to spend their whole morning leisurely walking around the market stalls. So the first impression you get is that these markets need to do their best to stay open if they want to continue their business in the future. Actually, the first step the city would need to take is to realize that markets they operate are businesses. Not a charity organizations, not a free public service to citizens, but businesses. And if you are running a business, you do not have a choice but to constantly innovate and stand up to your competition.

Must see a big picture

If you would have walked into their administration office and told them: ‘You need to, innovate, you need be competitive’, they would say: ‘We don’t need to be competitive, we just need to provide services to our citizens’. The problem is that they do not see a big picture, or they are not looking at wider environmental conditions (inside and outside their organization). Industry analyses would have shown them that nothing had ever stayed the same, or would ever stay the same in the future. Their environmental conditions may become better (not likely), or get worse (as in other western countries). So where do they stand?

In short, should they feel comfortable with what they have, or do they need to improve? I will give you just a few glimpses on the current situation in Vidikovac. First, when you get there, you don’t know how to get inside the market. The cars are parked all over the area, over the grass, on the side walks, even inside the stalls. It looks like a seen from the movie made in India (Bombay or Calcutta). The mud on pedestrian sidewalks is often ankle deep. The garbage is everywhere and the smell is unbearable. The buildings look depressed, and the slogans from the presidential elections held almost a year ago are still to be seen all over the buildings, and elsewhere. Loading and unloading of merchandise is going on even at the busiest time. You can just imagine how would you feel as a customer. Now, do you believe that open market like this has any chances competing with the big modern supermarket chains?

Architects dream

What’s funny (or sad) is that Vidikovac open market had been rebuilt a few years ago. The problem was that it was designed by architects with only one goal in their minds. ‘How to win architectural competitions?’ Or how to make the open market looking beautiful and pretty on their architectural drawings, or 3D models. Now, from the innovation prospective, we can say that they did implement changes, and brought new ideas in designing the new open market. But was this an innovation? If we look back at the definition of innovation above, we can see one crucial point missing. Are all these implemented ideas profitable, are they useful to people using the open market, customers as well as merchants? Unfortunately, they are not, because nobody looked at that point: “Are these changes for the better, or for worse?”. Of course wide areas covered with grass, trees and flowers do look beautifully on the architectural drawings, but the reality is that people need to park their cars somewhere. Yes, there is a small parking couple a hundred meters away, (from the early morning occupied by merchants). So what is the reality? People park all over, and the market doesn’t look like hotel resort the architects intended, but more like a pigsty, full of mud and garbage.

The conclusion of this ‘case study’ is simple. Innovation management is all about reality. Not about what we would like to achieve with our new ideas, but about what is really achievable. For new ideas to be useful, they need to be practical, to include best business practices of the past, combined with detailed research into existing conditions in the field. For Vidikovac open market it means the necessity of continuous innovation and change, adopting to the needs of people who are going to use it. So is the essence of innovation management. First, carefully looking around at your environmental conditions, realizing where you really stand. And second, bringing in and exploiting new ideas, (and introducing changes), only as an answer to the real needs of the people involved, inside and outside of the organization. Only then, when all the voices (inside and outside), are taken into account, could your new ideas become profitable and useful, and only than they become innovation.


Author
Miodrag Kostic, CMC
Director of VEZA d.o.o.

www.miodragkostic.com

www.businessknowledge.biz


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